During the ’70s and ‘80s successive governments of either persuasion continued to reduce eligibility for legal aid leaving a vast chunk of the public to pay for legal advice.

It was felt by many that access to justice was restricted to either the very rich who could afford to pay privately or those who qualified for legal aid.

There had also been pressure on successive governments to reduce the legal aid budget. This culminated in legal aid being removed for all personal injury litigation in January 2000. In order to increase access to justice, legislation was introduced which ran in tangent with changes in the Civil Practice Rules. It was believed that this would encourage early settlement of disputes and increase the band of population who could have access to legal advisers.

In April 2000 regulations were brought in enabling litigants to instruct legal advisers on what is now known as a no-win no-fee basis.

In 1998 Civil Procedure Rules were introduced. These brought in a number of new concepts. At the same time pre-action protocols were introduced in many areas of civil disputes. One of the first protocols brought in was in relation to personal injury litigation.

The Rules also brought in a concept of allocating civil claim to a track. There are 3 tracks and the selection of the appropriate track is generally governed by the financial value of the claim, disregarding interest, cost and contributory negligence.

(i) Small Claim
A small claim is one:-
(a) which has a financial value of no more than £5000;
(b) where any claim for personal injury the financial value of the claim is not more than £1000.

(ii) Fast Track Claim
A fast track claim is one where financial value of the claim does not exceed £15,000.

(iii) Multi Track Claim
A multi track is a normal track for any claim for which the small claims track or fast track claim is not a normal track. Thus any claim in excess of £15,000 in financial value is deemed to be a multi track claim.

The small claim track is designed to encourage litigants to take their own cases to the courts. The way in which this is facilitated is on the recovery of costs. It is fundamental principle of English law that costs follow events. Thus where a party is successful the opponent is ordered to pay the successful party’s legal costs. In the small claims track the successful party’s entitlement to recover costs is limited to the cost of issuing the summons and fixed cost. These are insignificant.

In fast and multi track claims the successful party will recover their legal costs on the standard basis. This means that the successful party will recover all reasonable costs reasonably incurred. The costs includes cost of successful party’s lawyers’ fees, the expense of investigating and pursuing the claim. Expenses would include barrister’s fees, medical expert fees, liability expert fees, expense of obtaining GP and hospital records and police accident reports. It follows that in a personal injury case involving financial value in excess of £1000 the claimant will recover the cost and expense. (See below).

CONDITIONAL FEE AGREEMENT

The Access to Justice Act brought in the concept of Conditional Fee Agreement. It is a principle of English law that a successful party can only recover its legal cost if there is a written agreement between it and the legal adviser. Since 1 April 2000 a litigant can retain services of legal advisers under a Conditional Fee Agreement. Under this agreement the client agrees to pay his advisers’ fees but this liability does not arise unless the claim is successful. This is commonly known as no-win no-fee. Success is defined as settlement in negotiation or at trial.

In order to recover the costs the litigant has to show that he/she has entered into a Conditional Fee Agreement with the advisers. We enclose a draft Conditional Fee Agreement commonly used.

A successful claimant is entitled to recover from the losing party the following:-

1. Basic Costs
These are costs charged by the solicitor on an hourly basis. The time spent on the file is calculated on an hourly basis with letters out and telephone calls charged separately. Letters and telephone calls are charged by dividing the hour into a unit of 10 with each telephone call of less than 6 minutes and a letter out charged at one-tenth of the hourly rate.

2. Success fee
As the adviser would not be paid by the client unless the claim is successful a concept of success fee was introduced in April 2000. Thus apart from basic costs the adviser is entitled to charge a success fee to the client. This is a mark-up on the hourly rate. The maximum success fee is 100%. The success fee is determined by the adviser at the initial stage of instruction. A number of factors are taken into account in arriving at a figure of success fee. The Court of Appeal recently adjudicated on the claimant’s right to recover success fee and the percentage of it where claims are settled before commencement of the proceedings. It held that in straightforward road traffic accident cases the claimant’s advisers could not justify a success fee in excess of 20%. However it did not lay down rules that 20% or more could not be charged by claimant advisers.

3. Premium for After the Event Insurance
Where claims were pursued with the benefit of public funding the successful party used to get an order for costs but there was always a qualification that such order for costs could not be enforced without leave of the court. This was often known as the ‘Pools’ Order. In practical terms this had very little benefit to the insurance industry. It was never practical to keep a file open to be able to return to the courts to seek leave of it to enforce the costs order.

A claimant runs the risk of having to pay the opponent’s costs in the event that a claim having been started is abandoned, discontinued or lost at trial i.e. the concept of costs following events.

In addition to basic costs and success fee a successful claimant can also recover the premium paid for an after event insurance. There are a number of providers of this in the market. We have experience of buying this cover from Amicus Legal Limited.

The Court of Appeal recently confirmed the claimant’s entitlement to premium even on claims settled without issue of proceedings and within the pre-action protocol period of 3 months. The paying party’s right to challenge the amount of basic cost, success fee and the premium remains unaltered.